Category Archives: Bay Area

The City of Oakland appears ready to join the short list of California cities regulating “tenant buyout agreements” – i.e., providing consideration to tenants to voluntarily vacate their rent-controlled rental units. Cities like San Francisco, Berkeley, Santa Monica and Los Angeles view these negotiations as inherently unequal, given that a landlord can threaten to perform an owner-move-in eviction or an Ellis Act eviction if the tenant doesn’t agree to accept money to leave.

The ordinance would add Section 8.22.700 to the Oakland Municipal Code. It would require disclosures of tenants’ rights, provide for a right to rescind (within 25 days, along with requirement to file the agreement in 45 days), and impose “vacancy control” constraints (the old rental rate) if a landlord threatened an OMI or Ellis eviction within 180 days. (Otherwise, a tenant move-out, even for payment, would be considered a “voluntary vacate” allowing a market rate increase.) The ordinance also imposes penalties for non-compliance, including enhanced penalties for non-compliant buyout agreements with elderly, disabled and catastrophically ill tenants.

Assembly Member Bonta has introduced AB 423 – an effort to amend the Ellis Act to prohibit the withdrawing of SRO (single room occupancy) buildings in Oakland. The Ellis Act already contains such a prohibition as to any city with at least a million residents and any city that is also a county. This latter restriction is perhaps a deft reference to the City and County of San Francisco – the only such city in the state of California. The amendment would specifically reference Oakland, which has a population under half a million.

Mountain View’s Measure V seeks to impose rent control on pre-1995, multi-unit buildings (keyed to CPI but nonetheless between 2 and 5%). It also requires “just cause” for evictions. However, shortly after Measure V was approved by Mountain View voters, the California Apartment Association filed a lawsuit challenging its constitutionality, among other things, on the basis that it constitutes an “‘unlawful taking’ under the United States and California constitutions”.

Part of the dispute is that, in an effort to ease the burden of recent rent increases, Measure V rolls back rents to October 19, 2015 levels. It is difficult to imagine why this should be a problem, as retroactive rent ceilings were approved in the seminal case, Birkenfeld v. City of Berkeley (1976) 17 Cal. 3d 129. Further, fighting over the end of 2015 as a benchmark may be futile, as this actually seems to have marked a turning point in the market. Birkenfeld also approved rent ceilings themselves, so long as they provided a “just and reasonable return”. The “CPI standard” employed by Measure V seems to have been sufficient in several Bay Area cities.

Further, a takings claim on the mere imposition of a rent control regime is a tough sell. While the eviction protections will remain intact during the challenge, a “physical takings” argument is unlikely to be successful where landlords have some method (like an owner move-in eviction) to recover possession for personal use (and the “just cause for eviction” provisions will go into effect notwithstanding the injunction). Meanwhile, “regulatory takings” require evidence of significant diminution in value. However, the disruptive effect of rent control on markets tends to actually increase the prices of rental property over time.

The most interesting thing about this lawsuit may be the allegation by Daniel DeBolt of the Mountain View Tenants Coalition (a group that promoted Measure V) that the City of Mountain View won’t be defending the measure against the California Apartment Association. Although, he has indicated that the Mountain View Tenants Coalition will defend the measure itself when it is allowed to intervene.

Voters in several counties across the Bay Area were asked to voice their opinions on rent and eviction control on election day. With the exception of San Mateo County, Bay Area residents enacted measures that will limit future rent increases and allowable reasons for evictions.

Costa-Hawkins prohibits local price control regulations on rental units constructed after February 1, 1995, as well as rental units that are separately alienable from others on the same parcel (i.e., houses and condos). Each of the local rent-control measures, therefore, sought to impose price controls (keyed to the consumer price index to maintain fair returns after inflation) for multi-unit buildings that existed prior to the enactment of Costa-Hawkins.

Costa-Hawkins does not affect eviction controls, and California has no other state eviction law, so several of these measures are able to impose “just cause for eviction” regulations on residential rental units, whether or not they are multi-unit and regardless of the year of construction.

San Mateo County:Burlingame Measure R: Failed
Measure R would have imposed rent control on pre-1995, multi-unit buildings. Would have required “just cause” for eviction on all rental units.

San Mateo Measure Q: Failed
Measure Q would have imposed rent control on pre-1995, multi-unit buildings. Would have required “just cause” for eviction on all rental units.

Santa Clara County:Mountain View had two competing rent control measures on the ballot – Measure W and Measure V – and voters passed the stronger of the two, Measure V.

Measure V imposes rent control on pre-1995, multi-unit buildings (keyed to CPI but nonetheless between 2 and 5%), and creates limits on evictions. It exempts single family homes and condos from both rent and eviction controls.

Measure JJ would require that landlords must petition the Rent Adjustment Program prior to serving any rent increase notices that exceed those allowed by the Rent Adjustment Ordinance (i.e., in the event of a Costa-Hawkins increase).

It would also amend Measure EE, which previously exempted any “newly constructed” units created after its enactment. It would alter the “new construction” exemption to include any units built through December 31, 1995. This date happens to be the last date that Costa-Hawkins “grandfathered” in certain units/tenancies that it otherwise sought to exempt from rent control. However, it’s not clear from the City Council’s findings why they chose this date, as Costa-Hawkins (a state law) does not regulate eviction controls – an authority long held to be reserved to local governments.

The City of Oakland has passed an emergency interim ordinance to curtail the effects of rent increases. While Oakland’s rent ordinance already prohibited rent increases exceeding the allowable annual rate (keyed to CPI adjustments), landlords could impose rent increases exceeding this rate (up to ten percent) for things like capital improvement passthroughs. (After all, everybody likes living in apartments that have roofs.) Also, two and three-unit, owner-occupied buildings had been exempt. Under Ordinance 13360, the owner-occupied exemption and CPI-exceeding increases are eliminated during the 90-day moratorium period. The moratorium also prevents unauthorized increases for substantially rehabilitated buildings.

There is, perhaps, a difference of opinion about whether constraining housing supply (by creating price ceilings and disincentives for tenants to move) actually puts upward pressure on housing prices overall. And, for now, this moratorium prevents covered rent increases for only 90 days. Maybe the moratorium will meet falling prices in a cooling market and have the desired effect of preventing displacement. Or, if the prohibitions become permanent, maybe we can track their effects in the next housing crisis.

Among other things, the new legislation requires disclosure to tenants of their rights under the ordinance, and it allows tenants to rescind an executed buyout agreement for up to thirty days. The ordinance was adopted on March 31, 2016 and becomes effective April 30, 2016. The Berkeley Rent Board has also generated required forms to comply with the ordinance.

The East Bay Express reports on the Oakland City Counsel’s proposed amendment to the rent ordinance, which would expand the payment of relocation assistance when tenants are displaced by the Ellis Act. Currently, only low income tenants receive relocation assistance of roughly $8,000 per unit (plus $2,500 for homes with minors, seniors and disabled tenants). The amendment would expand this payment to apply to all displaced tenants, regardless of income level.

This expansion would track a 2003 amendment to the Ellis Act. As the First District Court of Appeals noted, in the case Pieri v. City and County of San Francisco, this amendment removed the limitation that these payments only be given to low income tenants. In that case, the Pieri court upheld a San Francisco ordinance, similarly expanding the required relocation payments to all tenants displaced by the Ellis Act, finding the amount of that payment “reasonable”.

And, while there are certainly limits on what constitutes a “reasonable” relocation payment, the East Bay Express notes that the legislative intent is to allow “displaced renters cover the first and last month’s rent for new apartments . . . and help with other fees and expenses associated with moving in to a new place”. Where Oakland is now the fourth most expensive rental market in the country, these dollar amounts seem to stand a good chance of being “Pieri reasonable”.

Residential Rent and Eviction Control Resources

Justin A. Goodman, Esq.415.956.8100

Costa-Hawkins.com is a product of Justin A. Goodman, esq. of Zacks, Freedman & Patterson, P.C., in San Francisco, California. This site is not intended to provide legal advice. It is not affiliated with any government agency.